The disadvantages of lending money to family and friends
Everyone knows that money can be a delicate subject that should be treated with some caution. However, it can also be difficult to say no to a friend who comes to you for help, and especially if you know that friend has no other options. Therefore, it may also be easier said than done to say no to lend money, but money can also ruin your relationship with others.
Therefore, you should always consider an extra time before lending money to others. This article gives you 5 good reasons why you should not lend money.
You can lose your money
This is obviously an obvious reason, but also a good reason why you should not lend to others. Even if the person you lend money to says they’ll probably pay them back, you can’t know for sure that they actually do. If your friend is having financial problems, these problems may not end. A good rule: You should not lend money unless you are prepared to lose them.
Before you lend money to others, consider whether you are good at confrontations. If you do not like to confront others, you should not lend money as it may cause you too many considerations and frustrations to have to resort to money that has not been repaid. If you still lend money, have a clear agreement on when the money should be repaid.
If you have lent money to someone once, they may be coming to you again to lend more money. They may know that you have a hard time saying no and can take advantage of your financial situation. Some people may make it a bad habit to take out a loan, which is why you should remember to say no – even if you may have already lent them money once.
You may need the money
Life is full of surprises and unforeseen expenses. Therefore, you can quickly end up in a situation where you will need the money you have borrowed and thus put yourself in a difficult or stupid financial situation.
It can hurt your relationship
If you have a good relationship with a friend or family member, it would be silly to ruin it with money. Although you might expect them to repay the money, but failing to do so can trigger unpleasant confrontations and disputes that can eventually ruin your relationship. A good advice is to make clear agreements about when the money will be repaid. You can also consider whether you want and afford to give the money to them, thus avoiding the loan relationship between you.
Loans between family members
If you still choose to give a larger loan to a family member, you should consider getting help making overnight loans, also called family loans, through a lawyer or the bank. With these loans, both parties sign a debt note, which enters into agreements and terms for repayment of the loan